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Renewable energy: A solar energy expert from the Netherlands' Twente University, Angele Reinders (right), stands in front of solar panels that are part of a new photovoltaic (PV) solar energy system in Jayapura, Papua. The new system can produce about 50,000 kilowatt hours (kWh) of electricity per year, the equivalent of saving around 5,000 liters of diesel and 11,000 kilograms of coal annually. (Courtesy of The Netherlands Education Support Office Indonesia)

The government is banking on renewable energy to boost power supply in the six darkest provinces, all located in eastern Indonesia, as it aims to increase the national electrification ratio to 99 percent by 2019, up from 87 percent at present.

According to Energy and Mineral Resources Minister Sudirman Said, 12,669 villages are disconnected from the electricity grid, most of them located in the provinces of West Nusa Tenggara, East Nusa Tenggara, Papua, West Papua, North Maluku and East Maluku.

"It will be one of our areas of attention to tackle the gap within three to four years," Sudirman said after signing a Memorandum of Understanding (MoU) with the Financial Services Authority (OJK) in Jakarta on Wednesday.

On the other hand, Sudirman continued, the government had yet to capitalize on Indonesia's renewable energy potential, utilizing only 3 percent of the total estimated potential of 300,000 megawatt.

"By 2025, we need to boost the renewable energy portion in the energy mix from the current 6.8 percent to 23 percent," Sudirman explained, adding that up to Rp 1,600 trillion of investment were needed to meet this target.

Therefore, the ministry and the OJK signed the MoU on the acceleration of renewable energy development by increasing the role of financial institutions, given the fact that the state budget only allocates around Rp 2 trillion per year for developing renewable energy.

OJK chairman Muliaman Hadad added that several financial institutions had committed to invest up to Rp 3 trillion into renewable energy this year.

"At first [it will be] Rp 1 trillion, but later it will increase to Rp 3 trillion rupiah in 2016. Hopefully, it will become the first step of sustainable investment in renewable energy," he said. (ags)(+)